Rules and Regulations on Cannabis Loyalty Programs in California

California state law

To help dispensaries design loyalty programs that are compliant with regulations, we combed through the California cannabis laws and regulations for code relevant to operating a dispensary loyalty program. We highlight these regulations below:

Free giveaways are not allowed

The law

  • A licensee shall not give away any amount of cannabis or cannabis products, or any cannabis accessories, as part of a business promotion or other commercial activity. (California Business and Professions Code § 26153)
  • Any advertising or marketing … that is placed in broadcast, cable, radio, print, and digital communications … shall not advertise free cannabis goods or giveaways of any type of products, including non-cannabis products. This includes promotions such as:
    • Buy one product, get one product free;
    • Free product with any donation; and
    • Contests, sweepstakes, or raffles. (California Code of Regulations § 5040. Advertising Placements.)

The response

Instead of free giveaways, offer ultra-low-price items for a nickel.

Maintain loyalty marketing records and documentation

The law

  • Maintain records and documentation to establish that its advertising and marketing meet the requirements of Chapter 15 (commencing with section 26150) of the Act. The records shall be maintained in accordance with section 25160 of the Act and Section 50400 of this chapter. (California Code of Regulations § 40525. Advertising and Marketing.) 
  • All records related to commercial cannabis activity as defined by the licensing authorities shall be maintained for a minimum of seven years. (Business and Professions Code § 26160.)

The response

Make sure your loyalty program’s database is secure, auditable, and pre-equipped to generate the necessary compliance reports. Toka’s loyalty management software will have you covered. 

Age confirmation

The law

  • Prior to any advertising or marketing from the licensee involving direct, individualized communication or dialogue, the licensee shall use age affirmation to verify that the recipient is 21 years of age or older. (California Code of Regulations § 5041. Age Confirmation in Advertising.) 
  • Any advertising or marketing … shall only be displayed after a licensee has obtained reliable up-to-date audience composition data demonstrating that at least 71.6 percent of the audience viewing the advertising or marketing is reasonably expected to be 21 years of age or older.  (California Code of Regulations § 5040. Advertising Placement.)
  • Immediately upon request, a licensee shall provide to the Bureau audience composition data … for advertising or marketing placed by the licensee  (California Code of Regulations § 5040. Advertising Placement.)

The response

  • If the program uses open membership eligibility, pre-screen participants by age at program registration.
  • Maintain a database with organized and easily retrievable records. 

Daily purchase limits

The law

A licensed retailer shall not sell more than the allowed amounts to a single adult-use cannabis customer in a single day. (California Code of Regulations § 5409. Daily Limits.)

The response

Make sure no more than the daily limit amount of rewards are redeemed in one day. An integration with the POS system can help with this.

App store rules

For dispensaries interested in a mobile loyalty app, the rules of Apple App Store regarding cannabis apps are also highly relevant. We highlight them below:

Apple App Store Review Guidelines states: Apps that encourage consumption of tobacco and vape products, illegal drugs, or excessive amounts of alcohol are not permitted on the App Store. Apps that encourage minors to consume any of these substances will be rejected. Facilitating the sale of marijuana, tobacco, or controlled substances (except for licensed pharmacies) isn’t allowed.23

By Nora Chen